1 occasional paper on economic statistics SINGAPORE HOUSEHOLD BALANCE SHEET: 2005 UPDATE AND RECENT TRENDS Singapore Department of Statistics June 2006 Papers in this Occasional Paper Series provide an informal means for the speedy dissemination of statistical trends and observations. They are intended to stimulate discussion and research on important social and economic issues. Statistical estimates presented in the papers are based on new or revised official statistics compiled from the best available data. Comments and suggestions are welcome. Singapore Department of Statistics. All rights reserved.
2 Please direct enquiries on this occasional paper to: Sectoral Accounts Section Singapore Department of Statistics Tel : or Application for the copyright owner s written permission to reproduce any part of this publication should be addressed to the Chief Statistician and ed to the above address.
3 Singapore Household Balance Sheet: 2005 Update and Recent Trends Introduction 1. The Singapore Department of Statistics (DOS) has since 2003 compiled the aggregate household balance sheet from reference year As reported in previous papers 1, Singapore households have accumulated significant net wealth over the years. 2. This paper presents the underlying concept and methodology as well as updates the household balance sheet to An examination of the recent trend shows not only has household net wealth continued to rise, but also that there has been a subtle change in the relative composition of household assets. Concepts and Methodologies 3. The household balance sheet shows the stocks of household assets and liabilities at a particular point in time (Table 1). Net wealth is defined as the value of assets less liabilities. Assets Table 1 Singapore Household Balance Sheet Liabilities/Net Wealth I. Assets II. Liabilities (Loans) 1. Non-Financial Assets 1. Mortgages (a) Public Housing (a) Private Housing Loans (b) Private Housing (b) HDB # Loans 2. Financial Assets 2. Personal and Other Loans (a) Currency and Deposits (b) Shares and Securities (c) Equity in Pension Fund /CPF* (d) Equity in Life Insurance III. Net Wealth (I II) * CPF refers to Central Provident Fund # HDB refers to Housing Development Board 1 DOS Occasional Paper Wealth and Liabilities of Singapore Households, March 2003 and Statistics Singapore Newsletter Household Balance Sheet, 2003, September
4 4. Household assets can be either classified as financial or non-financial assets. Financial assets include currency, deposits with banks, shares and securities, equity in pension funds (mainly CPF balances) and equity in life insurance reserves (attributable to households as policyholders). Non-financial assets are mainly residential property assets. Household (financial) liabilities comprise mortgage loans (from HDB, banks and other financial institutions) and personal loans (from banks and other financial institutions). Rising Household Net Wealth 5. Household net wealth was relatively stable in the early 2000s even as households continued to save. This largely reflected the economic uncertainties as well as relatively weak property and equity markets in those years. However, with economic growth accompanied by rising property and equity markets in recent years, household net wealth grew steadily from S$549 billion in 2002 to about S$660 billion in 2005 (Chart 1). Chart 1 Composition of Household Net Wealth , $Bn Financial Assets Non Financial Assets Liabilities Net Wealth 6. Total assets stood at S$820 billion in 2005, reflecting a growth of 5.4 per cent (or S$42 billion) from the previous year. Financial assets grew by 8.9 per cent (or S$36 billion) while non-financial assets (property assets) increased by 1.4 per cent (or S$5.3 billion). Household liabilities increased by a moderate 0.7 per cent (or S$1.1 billion) to reach S$160 billion in Mortgage loans grew by 1.0 per cent (or S$1.2 billion) while personal and other loans declined slightly by 0.3 per cent (or S$0.1 billion). Household net wealth consequently grew by 6.6 per cent (or S$41 billion) to reach S$660 billion in
5 Rising Share of Financial Assets 7. Households holdings of financial assets grew faster than its holding of non-financial (or property) assets (Chart 2). Consequently, financial assets as a share of total household assets grew from 47 per cent in 2000 to 54 per cent in Conversely, the share of non-financial declined steadily from 53 per cent in 2000 to 46 per cent in 2005 (Chart 3) % Chart 2 Growth of Household Assets Financial Assets Non Financial Assets Chart 3 Share of Household Assets % Financial Assets Non Financial Assets 3
6 8. The change in the relative shares of financial and non-financial assets is largely driven by changes in their relative prices. Until recently, the sluggish performance of the property market could have prompted households to diversify their asset portfolios towards increasing their holdings of financial assets so as to reduce the investment risks from property assets (Chart 4). In addition, the rising stock market since 2002 had resulted in an increase of the value of equity holdings and consequently an increase in the share of financial assets in household asset portfolios (Chart 5). Chart 4 Residential Property Price Indices Index URA Private Residential Property Price Index HDB Resale Price Index Sources: Urban Redevelopment Authority (URA) & HDB Chart 5 Straits Times Index (As At End-Dec) 2600 Index Source: Singapore Exchange (SGX) 4
7 Steady Decline in Currency and Deposits 9. Households holdings of currency and deposits (which comprise the majority of household financial assets) declined steadily in recent years, with its share to financial assets dropping from 40 per cent in 2000 to about 33 per cent in Conversely, the share of equity in life insurance as well as shares and securities had exhibited an upward trend in recent years. The share of equity in pension funds/cpf had remained relatively stable at about 27 per cent (Chart 6). Chart 6 Share of Financial Assets % Currency & Deposits Equity in Pension Funds/CPF Shares & Securities Equity in Life Insurance 10. The steady decline in households holdings of currency and deposits could be attributed to the active promotions in a wide range of financial or investment products (eg unit trusts, investment-linked insurance policies, etc) by banks, insurance companies and other financial institutions to households, seeking to increase the return or yield on their savings relative to low deposit interest rates prevailing in these years. Increase in Bank Mortgage Loans 11. Reflecting Singapore s high home ownership (about 92 per cent 2 in 2005), mortgage debts continued to contribute to the bulk of household liabilities with HDB loans and bank mortgage loans making up 34 and 40 per cent of total liabilities in 2005 respectively (Chart 7). 2 Singapore in Figures 2005, DOS 5
8 Chart 7 Composition of Household Liabilities % HDB Loans Personal Loans & Other Loans Bank Mortgage Loans 12. The share of bank mortgage loans had increased fairly significantly from 30 per cent in 2000 to 40 per cent in 2005 while that of HDB loans had declined from 43 per cent in 2000 to 34 per cent in 2005 (Chart 7). The change in the relative composition of mortgage loans by banks and HDB could be attributed to the policy change in 2003 for banks to take over from HDB the provision of market-rate housing loans for the purchase of HDB flats. Household Balance Sheet in Selected OECD Economies Net Wealth 13. Singapore s ratio of household net wealth to GDP 3 remained relatively stable at around 350 per cent over the past five years. In 2004, this was higher than Canada s net wealth ratio but lower than that of US and UK (Chart 8). 3 GDP is valued at current market prices. 6
9 Chart 8 Country Comparison of Net Wealth Ratios % of GDP Canada Singapore US UK Japan Source: OECD Economic Outlook Note: 2004 data for Japan are not available. Household Assets 14. Singapore households generally possess a higher proportion of nonfinancial assets 4 in their portfolios compared with those in Canada, Japan and US. Consistent with the relatively weak property market, the share of property in household total assets had exhibited a declining trend since 2000 (Chart 9). In contrast, the buoyant property market in UK, US and Canada had resulted in a rising share of property in these countries. UK s share of non-financial assets to household total assets had exceeded Singapore s since Data on non-financial assets for OECD countries (ie UK, US, Japan & Canada) include stock of durable goods at replacement cost and property assets at market value while data on non-financial assets for Singapore refers to property assets at market value. 7
10 Chart 9 Share of Non-Financial Assets to Household Assets % 55 UK 50 Singapore Japan Canada US Source: OECD Economic Outlook Note: 2004 data for Japan are not available. Household Liabilities 15. Singapore s household indebtedness (measured by the ratio of outstanding loans to GDP) declined considerably in recent years, from 97 per cent in 2003 to 88 per cent in 2004 (Chart 10). As at end-2004, Singapore s household indebtedness ratio was lower than that of UK and US. Chart 10 Household Liabilities Ratios % of GDP Canada Singapore US UK Japan Source: OECD Economic Outlook 8
11 Mortgage Ratios 16. Singapore s ratio of mortgage to household liabilities remained stable at around 73 per cent for the period 2000 to 2004, and was generally comparable to that of UK and US (Chart 11). The relatively high and stable ratio of mortgage loans to household liabilities could be attributed to the high home ownership rate in Singapore. For the UK and US, the increasing ratio of mortgage to household liabilities was a reflection of the rapidly rising property prices in recent years. Chart 11 Share of Mortgage in Household Liabilities % Singapore UK US Canada Japan Source: OECD Economic Outlook 17. Singapore and US generally had higher ratios of mortgage to nonfinancial assets compared to Canada, UK and Japan, reflecting the larger extent to which the purchase of properties was financed by mortgage loans in these countries (Chart 12). In particular, Singapore s ratio of mortgage to property assets had increased from 28 per cent in 2000 to 32 per cent in
12 Chart 12 Ratio of Mortgage to Non-Financial Assets % US Singapore Canada Japan UK Source: OECD Economic Outlook Note: 2004 data for Japan are not available. Conclusion 18. In line with good economic growth and rising asset prices, Singapore household net wealth grew by 6.6 per cent to S$660 billion as at end-2005 from S$619 billion as at end The growth in financial assets had outpaced that of non-financial (property) assets. Financial assets had since 2002 comprised more than half of households total assets. Currency and deposits share in financial assets had declined in recent years reflecting the subtle shift towards investments in equities, insurance and unit trusts by households seeking to increase returns on their savings. SINGAPORE DEPARTMENT OF STATISTICS JUNE
13 Annex Singapore s Household Sector Balance Sheet Amount (S$ Million) Household Net Wealth (I II) 548, , , , , ,024 I Total Assets 686, , , , , ,168 Financial Assets 324, , , , , ,232 (a) Currency & Deposits 130, , , , , ,132 (b) Shares & Securities 72,253 66,841 69,169 87,116 97, ,390 (c) Equity in Life Insurance 31,659 44,371 50,510 57,761 64,675 73,105 (d) Equity in Pension Funds/CPF 2 90,327 92,256 96, , , ,604 Residential Property Assets 361, , , , , ,936 (a) Public Housing 192, , , , , ,905 (b) Private Housing 169, , , , , ,031 II Liabilities 138, , , , , ,144 Mortgage Loans 100, , , , , ,419 (a) Bank Loans 41,251 43,571 46,135 52,899 59,798 63,462 (b) HDB Loans 59,288 62,223 64,410 60,888 57,411 54,956 Personal Loans & Other Loans 38, ,338 39,408 42,372 41,867 41,725 Figures may not add up due to rounding. 1 Figures for 2005 are preliminary. 2 Total amount due to members (net of withdrawals). 11
14 Annex Singapore s Household Sector Balance Sheet Growth Rate (%) Household Net Wealth (I II) I Total Assets Financial Assets (a) Currency & Deposits (b) Shares & Securities (c) Equity in Life Insurance (d) Equity in Pension Funds/CPF Residential Property Assets (a) Public Housing (b) Private Housing II Liabilities Mortgage Loans (a) Bank Loans (b) HDB Loans Personal Loans & Other Loans Figures may not add up due to rounding. 1 Figures for 2005 are preliminary. 2 Total amount due to members (net of withdrawals). 12
15 Annex Singapore s Household Sector Balance Sheet Share (%) Household Net Wealth (I II) I Total Assets Financial Assets (a) Currency & Deposits (b) Shares & Securities (c) Equity in Life Insurance (d) Equity in Pension Funds/CPF Residential Property Assets (a) Public Housing (b) Private Housing II Liabilities Mortgage Loans (a) Bank Loans (b) HDB Loans Personal Loans & Other Loans Figures may not add up due to rounding. 1 Figures for 2005 are preliminary. 2 Total amount due to members (net of withdrawals). 13
16 SINGAPORE DEPARTMENT OF STATISTICS INFORMATION DISSEMINATION SERVICES Statistics Singapore Website The Statistics Singapore Website was launched by the Singapore Department of Statistics in January Internet users can access the website by connecting to: Providing key Singapore statistics : Latest Data / KeyStats which provide key data on Singapore s economy and population. Media Releases which cover the Performance of Singapore Economy, the Consumer Price Index, the Wholesale Trade Index, Business Receipts Index for Service Industries, Retail Sales and Catering Trade Indices, Manufacturing Performance, Singapore External Trade, Tourism Sector Performance, Real Estate Information and Employment Situation. Papers and Analyses which provide papers on economic and social topics. Providing information on statistical resources : Online Publication Catalogue which lists the latest editions of publications released by the Singapore Department of Statistics at More publications will progressively be made available for access without charge. Advance Release Calendar which covers key Singapore economic indicators. Providing a convenient gateway to international statistical websites : Guide to International Statistics which covers international databases, classifications and links, and statistical terms and definitions. IMF Dissemination Standards Bulletin Board which provides metadata about Singapore s key indicators in the real, fiscal, financial and external sectors, including dissemination practices and information about prerelease access of current indicators. SingStat Express SingStat Express is a personalised data delivery service which sends the latest press releases, notices of publication, newsletter, occasional and information papers to subscribers via . The Monthly Digest of Statistics (softcopy) and more than 50 key indicators and statistical indices are included for subscription at a nominal fee. Subscription details are available from the Statistics Singapore Website (http://www.singstat.gov.sg/express/express.html).
17 SINGAPORE DEPARTMENT OF STATISTICS INFORMATION DISSEMINATION SERVICES (continued) Key Singapore Data on Palm OS Devices The pdf version of "Singapore in Brief 2006" for Palm OS devices is available for downloading from the Statistics Singapore Website. SingStat Time Series (STS) Online System The SingStat Time Series (STS) Online System is an internet-accessible time series retrieval system. The STS includes some 5,000 historical data series on Singapore society and economy from several domains, including national accounts, balance of payments, investments, finance, labour, prices, business expectations, trade, manufacturing, tourism, demography, health and education. Besides the usual monthly, quarterly and annual data, STS includes also seasonally adjusted data series for key economic indicators providing for a better analysis and understanding of current economic trends. The STS also offers: Web-based search engine that is easy to use; Bookmark features that enable users to save and organise links in their personalised portals. Subscription to STS is opened to local and overseas users. More information on STS are available via Statistics Singapore Website. For enquiries, please contact our Department at Tel : E-survey The E-survey enables business organisations to complete and submit their survey forms through the internet. Using secured encryption protocols, the E-survey ensures that the information transmitted through the net is secured and protected. The system features online helps and validation checks to assist respondents in completing their survey forms. With the E-survey, respondents do away with the tedious paper work and manual tasks of mailing or faxing their survey returns to the Department. Statistical Enquiries and Feedback If you have any statistical enquiries or comment or suggestions on our statistical publications and electronic services, you are welcomed to : us at Fax to us at Tel: (65) Call us at Tel: * (local callers) (65) (overseas callers) * Calls from mobile telephone lines to 1800 local toll free number may be subject to mobile airtime charges as imposed by the relevant mobile service provider.